2020. It will forever be known as the year that went off-script for everyone.
I know first-hand how hard some have been influenced by the global state. Like me, you’ve probably noticed the explosive number of new offerings for online courses – Anything from slow roasting last year’s pantry leftovers to courses teaching you How to Actually Run a Course.
The trading sector is no different. Overnight teachers and gurus are popping up everywhere. Close to home, I’ve also had plenty of friends call to ask how they might “have a lash at this trading caper” certain it might be a replacement income strategy.
As sporting as the term “having a lash” is, there’s a bit of flawed logic here. It’s almost akin to thinking that just because you own a powertool, you might just crack it as an orthopaedic surgeon.
My standard response is to send newbies away with the thickest reading manual I can find on the subject of Technical Analysis. I’m kind enough to invite them back with any questions. Silly questions even. But sadly, I am yet to find any takers.
As someone who’s been at this for a decade and a half, I am wealthy in the number of mistakes I’ve made. I see that as a huge upside by the way. I have nostalgic memories of the first ever course I paid good money to attend. The Course Director: First name Franc (yeah as in Swiss Franc) Last name Manhattan. I remember thinking, that’s a convenient name for someone teaching Foreign Exchange! (Sorry to all the legit Franc Manhattans out there on Facebook). I remember that remorseful feeling of knowing I had just flushed $2000 in course fees down the toilet. It came in response to asking about the emotional side of trading. To which Mr Swiss Franc responded……….”Oh I don’t actually trade. I don’t have the nerves for it.” Gravity moment. Looking back, I’m just thankful the sum of money I paid didn’t have an additional zero on the backend for what was nothing more than a lame moving average crossover system.
Anyway, in a sincere bid to help the next person avoid flushing their own hard earned Spondulicks down the pipes, here’s my Top 5 Tips of what to look for if you happen to be shopping for a System or looking to get your start in the financial markets.
Number 5 – Decide what kind of trader you want to be. Short term or long term. Don’t try and be both. It’ll mess with your head. You won’t want to see the short-term clues in case it’s detrimental to your long-term position.
And on the topic of long-term vs short term – I wouldn’t be making the assumption that you’ll go with being a short-term trader because it’s easier than long term. This point is rather counter intuitive. Short term trading is, in my opinion, harder and more involved than long term. Why? Because there’s cycles within cycles within cycles in the short term. And it takes a certain “brain mass” before you start to seamlessly read that. If you’re in that short- term wading pool, you need factor in the ruckus an enemy Destroyer might create if it cruises into your calm waters. Or if you’re a tennis fan, the equivalent of knowing you’re about to face Federer in the next round.
Number 4 – If someone’s selling you a system, make sure it’s not just a way to get in and open a position. When the market’s trending heavily, just about every entry system known to man will trigger an open of position. A trading plan needs clear rules about when to trigger into a trade, when to stay in, when to exit, when to cut, risk management and how to filter Noise during sideways congestion. Without these components, what you’ve got is a piece of a system ……………not a full system. Make sure you get a full system. Ask questions.
Number 3 – If someone is upselling their services to invest your money in their amazing system, it’s simple – ask for some independently audited results. If they’re transparent and genuine, they’ll be gagging to share that with you. It’s amazing how many pushy salesmen can’t wait to get off the line when you press for third party disclosure!
Number 2 – If you plan on becoming a trader yourself, be prepared to do some work on your emotional self. Success in this game is not always winning. It’s also how you handle the losses and operate in a world of “no guarantees”.
I’ll quote a line from a favorite movie – “Doubt will kill you as sure as any bullet.”
If it’s true, it means you have to have belief, commitment and resolve in what you know. Not impossible, but not easy either if you don’t view challenge as opportunity. And guess what? Most people don’t.
My number 1 Top TIP * Warning! Opinion forthcoming!!!! The short cut is really the long cut. By this I mean, if you want to parlez in this world, learn the language. And I don’t mean just picking up some buzz words. Reading a chart is like reading a language. A language of buyers and sellers. So understand the language. Understand it as deeply as if you decided to take up French and become fluent. Learn what the patterns actually mean and if you do, you have a perennial sit- rep (aka situational report) for any and all circumstances. Just remember, if you put moving averages and other lagging indicators on your chart, this is not actually reading the raw data. Indicators are something you impose OVER top of the raw data. Oh, and they always look wonderful in backtesting. But, the raw data is the level playing field – a moment to moment record of the buy-sell push pull – the ultimate reality check, the ultimate expression of what’s happening NOW.
A final note. If you’re new to the markets, you can get Started for Free with NinjaTrader and Free End of Day data.